June 21, 2012 By gpc1981 http://gainspainscapital.com
http://albertpeia.com/germanypullout.htm
‘As I’ve
( Graham Summers ) assessed in earlier pieces, neither
the Fed, nor the IMF, nor the EFSF, nor the ECB has the firepower or the
political backing to prop up
This
ultimately leaves the ESM, the permanent European Stability Mechanism… which
technically doesn’t even exist
yet (it’s supposed to be ratified by July 2012).
That’s
right… the bailout fund which is meant to SAVE
Indeed,
in order for the ESM to be ratified it needs the individual EU member states
that will contribute 90% of its capitalization to first ratify it on an
individual basis.
Here’s
the list of countries that represent that
90% of capital as well as the status of their individual ratifications and the
percentage of funding they are to provide.
|
Country |
Ratified? |
Percentage of Capital |
|
|
NO |
27% |
|
|
YES |
20% |
|
|
NO |
18% |
|
|
NO |
12% |
|
|
YES |
6% |
|
|
NO |
3% |
|
|
YES |
3% |
|
|
NO |
3% |
|
|
NO |
2% |
|
|
NO |
2% |
|
|
NO |
1% |
|
|
NO |
0.8% |
|
|
YES |
0.5% |
|
|
NO |
0.2% |
|
|
NO |
0.1% |
|
|
NO |
0.1% |
|
|
NO |
0.07% |
To
summate the above chart succinctly… only four
of the required 17 countries have even ratified the ESM (it’s supposed to be
completely ratified in July 2012).
Moreover,
you’ll note that the PIIGS as a whole
are meant to contribute 36% of the ESM’s FUNDING!!!!
So…
More
importantly, neither has
To
whit, Germany’s ratification of the ESM is buried in legislature that includes,
among other things, the proposal of a financial transaction tax, which is
extremely popular with the Social Democrat Party (SPD), the main opposition
party to Chancellor Angela Merkel’s Christian Democratic Union (CDU).
Thanks
to recent elections, which saw Merkel’s CDU party get trounced (again, German
voters are FED UP with bailouts), the SPD now controls 11 of
This
is a big deal because the SPD is playing hardball regarding the passage of the
ESM legislation due to the fact that Merkel is not viewed to have been serious
about implementing the transaction tax proposal (which the SPD is pushing for
along with various other growth measures for the Germany economy).
Merkel
is scheduled to meet with the opposition leaders tomorrow. If they cannot
strike a deal it is quite possible that
The
SPD made it clear that it is willing to risk this just a few weeks ago:
German SPD Pushes Growth Saying
Merkel’s Crisis Policy Failed
The timetable for passing the fiscal pact and associated
legislation to set up the permanent bailout fund, the European Stability
Mechanism, is “completely unrealistic,” Steinmeier
told reporters in
As I
have stated many times in the past, politics trumps financial and economic
issues in
So,
we have to consider that the SPD may in fact be willing to let Germany get an
international black eye by failing to ratify the ESM legislation by its required
deadline (in order to further tarnish Merkel’s image).
By
the look of things, this may be the case:
German court may delay
The
German government and opposition reached a deal on Thursday on growth that will
allow parliament to approve the euro zone’s permanent bailout scheme next week,
but
http://www.reuters.com/article/2012/06/21/us-eurozone-germany-esm-idUSBRE85K0LU20120621
Folks,
this is not gloom and doom… it is reality. The
mega-bailout fund which is supposed
to backstop the EU doesn’t exist yet and is likely not to exist for several
months as various countries legislative bodies work through the paperwork and
legal ramifications.
I don’t know how else to put this,
but
Months
ago, I forecast that
On
that note I believe we have at most a month or two and possibly even as little
as a few weeks to prepare for the next round of the EU Crisis.
With
that in mind, I’ve begun positioning subscribers of my Private Wealth
Advisory for this very possibility. We’ve already locked in
over 30 winning trades this year by finding “out of the way” investments few
investors know about and timing our positions to benefit from the various
developments in